SEC to Ease Financial Reporting for More Small Companies

The U.S. Securities & Exchange Commission (SEC) eased financial reporting requirements for smaller reporting companies (SRCs)—a category established by the SEC in 2008—by increasing the thresholds below which companies can provide scaled-down disclosures under Regulations S-K and S-X.

The new, higher threshold is set at a public float—the shares outstanding that can be publicly traded—of less than $250 million (previously, it was $75 million). A company with no public float or one that’s less than $700 million will qualify as an SRC if it had annual revenues of less than $100 million (previously, $50 million) during its most recently completed fiscal year.

The House Financial Services Committee Chairman Jeb Hensarling (R.-Texas) said he was pleased with the SEC’s raising of SRC thresholds. But he added, “It is essential for the Commission to explore other pro-growth reforms to open our public markets, including addressing the accelerated filer threshold that imposes disproportionate compliance costs on companies that can’t operate with such a burden.”

Both the House and Senate are considering a slew of bills that would further reduce company financial reporting requirements for companies of various sizes and could result, for example, in fewer companies having to report 10-Qs and more having the ability to use alternative formats for quarterly reporting.

Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.